Transforming Energy

Imagine a morning when the lights and coffee machine don’t work, your home has no heat and your car doesn’t start. We generally don’t give much thought to where our energy comes from – we just flip the switch. But energy is an integral part of our economy, society and day-to-day life. It provides, in one form or another, all of the services we take for granted, from lighting to heating to the ability to travel. Moreover, buying and selling energy has considerable impact on the overall performance of the Canadian economy.

Imagine a morning when the lights and coffee machine don’t work, your home has no heat and your car doesn’t start. We generally don’t give much thought to where our energy comes from – we just flip the switch. But energy is an integral part of our economy, society and day-to-day life. It provides, in one form or another, all of the services we take for granted, from lighting to heating to the ability to travel. Moreover, buying and selling energy has considerable impact on the overall performance of the Canadian economy.

Supplying and using energy, however, affects the natural environment in many ways, from emission of greenhouse gases (GHG) to habitat degradation. Indeed, energy supply and use are at the centre of both sustainability concerns and potential solutions.

Analyzing the sustainability of energy in Canada requires looking at how we get energy, as well as how we transform it, transport it and use it (see Understanding Canada’s Energy Flows on page 51). Energy is available to us in many different forms, from coal to wind, each with unique advantages and disadvantages. Different regions of the country have access to different energy sources. Energy is transported to users in the form of carriers such as electricity and gasoline. Each time energy is converted from one form to another, some useable fraction is lost; this amount is defined by the efficiency of the conversion. In general, the fewer and more efficient the conversions, the better.

What is the problem?

On a large scale, Canada’s energy supply and demand are unsustainable. In 2012, almost 74 per cent of energy used in Canada comes from non-renewable fossil fuels. The production and use of fossil fuels have negative environmental impacts, including emissions of GHG and smog precursors, potential water contamination and habitat destruction. While a number of provinces generate the majority of their electricity from renewables or other non-fossil sources such as hydropower and nuclear, Canada’s transportation sector remains almost entirely reliant on fossil fuels. Overall, Canada’s energy system emits a large amount of GHG on a per capita basis. In 2011, burning fuels in Canada resulted in 530 million tonnes of carbon dioxide emissions. This is only about four per cent of all carbon dioxide emitted by fuel combustion in OECD countries. However, Canada has a relatively small population. Those 530 million tonnes translate to about 15 tonnes per person, about 50 per cent higher than the OECD average.

Globally, Canada ranks about 10th highest in terms of energy use per person.

Globally, Canada ranks about 10th highest in terms of energy use per person (and about 30th per unit GDP). There are many reasons for this. Our climate is cold in winter but often hot in summer, so we have large heating and cooling loads. Our cities and towns tend to be less dense than those in many countries around the world, making it more difficult to share heat and operate cost-effective mass transit. We are a geographically large country, so travelling from place to place requires more energy. We also export a lot of energy, which in turn requires energy to produce. Perhaps most challenging of all, because of our vast energy resources, we tend to take energy for granted.

Why does it matter?

Canada’s economic competitiveness is tied to the sustainability of its energy system, a fact that will become more evident as global efforts toward sustainability continue. On one level, each dollar a company spends to buy energy is a dollar lost in profit. While energy will always be a necessary expense, costs can be lowered if we use energy more efficiently.

This overall economic picture is complicated somewhat when we think about where that energy comes from: In 2013, Canada’s energy sector accounted for 9.6 per cent of our national GDP. While some might argue that using more energy is good for Canada’s energy sector and therefore good for our economy, we must also consider that using less energy might allow increased exports, extend the lifetime of our reserves and encourage economic growth in other sectors. Global perception of Canada’s sustainability can also impact our economic competitiveness on an international level. Consider the controversy surrounding the proposed Keystone XL pipeline: Concern over Canada’s environmental performance has been one of the most significant challenges facing this project.

In the City of Toronto, air pollution due to traffic alone is responsible for 280 premature deaths and 1,090 hospitalizations each year.

The ways we supply and use energy also have health implications for Canadians, which translate into another economic concern. The combustion of fossil fuels in power plants and vehicles emits chemicals that result in smog, including particulate matter. In the City of Toronto, air pollution due to traffic alone is responsible for 280 premature deaths and 1,090 hospitalizations each year. Particulate matter is one of the worst air pollutants in terms of impact on human health. According to the World Health Organization, global outdoor air pollution, specifically particulate matter, caused about 3.7 million premature deaths in 2012. 

Finally, there are the impacts on the natural environment. Most Canadians take pride in our ecosystems – the lakes, forests, plains and coasts. Moreover, these ecosystems provide essential services, such as cleaning our air and water and providing food and materials. All of these ecosystems can be impacted, directly or indirectly, by the supply and use of energy. Even energy sources we typically think of as “environmentally friendly” can have negative effects. For example, utility-scale solar farms can cover large areas of land and care must be taken to ensure they are appropriately sited. There is no perfect energy source. The preferred choice will always depend on the specific location and situation.

How do we solve the problem?

While there are many challenges to increasing the sustainability of our energy system, there are also many opportunities and positive examples to follow. These include large-scale efforts like the phase-out of coal-fired power plants in Ontario and the implementation of a carbon tax in British Columbia, as well as smaller-scale efforts like consumer rebates for purchases of energy efficient appliances. Nationwide, however, there has been relatively little consistent effort toward improving the sustainability of our energy system, in part because regional differences make changes easier or less expensive in some provinces than in others. We need to identify and implement short- and long-term strategies that will offer the most benefit per dollar invested. Broadly, these strategies must be financially feasible, improve social welfare and reduce the negative environmental impacts of energy supply and use.

The Canadian roadmap to sustainable energy must include:

Kicking the fossil fuel habit. We need to reduce the role of fossil fuels in our energy supply and maximize our use of lower-impact alternatives. This has the benefits of diversifying supply, reducing exposure to fossil fuel price risk (for both consumers and suppliers) and avoiding the environmental impacts associated with fossil fuels. There are, of course, challenges associated with this option: Alternative fuels may be more expensive and will almost certainly be less familiar, meaning people may be reluctant to use them. As well, since all energy sources and carriers have their own unique environmental impacts, care must be taken not to swap one negative environmental impact for another.

Despite these challenges, we are already making headway. In Ontario, the Green Energy Act promoted the development and use of renewable technologies as the province’s coal plants were being shut down. In the Northwest Territories, a solar array was recently installed to help meet one community’s electricity demand. As an added benefit, if we focus on developing ​technological​ solutions to our energy problems, we may find opportunities to sell those technologies into other markets.

One further step toward sustainability: Develop and implement long-term policies to encourage deployment of energy technologies where they are most cost-effective in reducing GHG emissions and other negative environmental impacts.

Reducing the environmental burden of fossil fuels. Even as we strive to reduce our reliance on fossil fuels, Canada will continue to use and sell significant quantities of those fuels for the foreseeable future. We can and should take measures to reduce the negative impacts of fossil fuel production and use.

The oil sands industry receives a lot of attention for its negative environmental impacts, and may in fact be feeling negative economic consequences as a result. However, there are steps that can and are being taken to moderate those impacts. For example, a large portion of the industry’s GHG emissions are associated with the production of steam from natural gas. This steam is used to heat the oil sands during the oil recovery process. Technologies that hold promise to reduce or eliminate this include replacing steam with solvent (hybrid steam-solvent processes) or electricity (electro-thermal processes). It is also important to consider modifications in the context of the full cycle of the fuel (i.e., extraction emissions are only a small fraction of the total life cycle emissions of transportation fuels; combustion of the fuel in a vehicle represents 60 to 80 per cent of life cycle emissions).

Responsibility for improving the sustainability of fossil fuel industries lies with multiple levels of government and with the industry itself. There are regulations in place to reduce the environmental impact of the production and use of fossil fuels, but more can be done. Alberta, a major producer and user of fossil fuels, charges a financial penalty for emissions above their target intensity of GHG. The onus then falls on industry to maintain its competitiveness while reducing emissions. Revenue collected by the province from the penalty goes into a technology fund. The fund is primarily used to support technology development projects that are expected to reduce GHG emissions.

One further step toward sustainability: Increase Alberta’s financial penalty for emissions, broaden its applicability and expand the program (or a version of the program) to other provinces with fossil
fuel industries.

Boosting energy efficiency. Improving energy efficiency is one of the more straightforward ways to increase sustainability. Monetary savings can make energy efficiency options attractive for both consumers (e.g., buying a new air conditioner) and suppliers (e.g., buying a new industrial-scale boiler). To be widely adopted, these options must recoup the initial cost of investment within a reasonable amount of time. This is a challenge in the building sector where existing technology to design buildings that use much less energy over their lifetimes is often not implemented. There are several reasons for this, including: The designer/builder will generally not be responsible for paying for the building’s lighting, heating and air conditioning over its lifetime; and, for those who do pay these bills, the time to recover the additional investment in energy efficiency is often too long to justify the increased purchase price.

One further step toward sustainability: Implement more stringent energy efficiency requirements in building codes for residential and commercial buildings. Require large users (e.g., municipalities and property-management companies) to report, and ultimately publicly disclose, the energy use of their buildings. Adjust energy prices to account for environmental damages (e.g., put a dollar value on carbon) to increase financial savings and improve the business case for energy efficiency investments.

Changing how we use energy. Many Canadians feel they have no control over the sustainability of our energy system. Individual acts can seem like tiny contributions to a large-scale problem, yet if we all participated, the results would be significant. Conservation has the added benefit of saving money, as long as the initial investment isn’t too big. For example, if every Canadian turned off a 60-watt light bulb for two hours each day (at no cost), we could avoid almost 400,000 tonnes of GHG emissions each year.

In addition to using less energy, many consumers can change when they use energy. This is the goal of time-of-use pricing implemented by various electricity distributors. By charging more for electricity during periods when demand is high, distributors hope to encourage people to shift their consumption to times when less electricity is being used throughout the region. Consider a hot summer afternoon in Ontario. Cooling loads are peaking and the electricity system could be straining to meet demand, perhaps running more highly polluting plants and importing power from the United States. You need to run your dishwasher. If you run it now, you increase the strain on the grid and require that more electricity be generated or imported. Under time-of-use pricing, you would pay more for that electricity than if you waited to run the dishwasher in the evening when there is much lower demand on the grid. Spreading out the electricity demand in this way keeps total electricity prices and potential environmental impacts lower and means less energy infrastructure is required.

Consumers also have the ability to change which fuels they use for which purposes. Choosing an alternative fuel or energy source is not always an easy or simple decision. Consider a consumer’s choice of automobile, ignoring differences in cost for a moment. A battery-powered, fully electric vehicle would be a good option for someone with a short commute who lives in a jurisdiction with an electricity grid primarily supplied by renewable sources. A neighbour who faces a lot of stop-and-go traffic and a longer commute would be better served with a plug-in hybrid electric vehicle. For a third citizen travelling long distances and living in a jurisdiction with an electricity grid that is primarily reliant on fossil fuels, a hybrid electric vehicle (non-plug-in) would be a better choice.

One further step toward sustainability: Vehicle labels could include estimates of the life-cycle emissions and costs to consumers (e.g., those associated with vehicle manufacture, vehicle use in the jurisdiction in which the vehicle was sold and vehicle end-of-life) rather than focusing only on fuel consumption (L/100 km) and fuel cost. Vehicle pricing incentives could consider the life-cycle perspective.

Let’s return to the morning your lights and coffee machine failed. How might this day awaken you to the sustainability of energy systems – despite your current lack of caffeine? Could you get through the day, week or year using a fraction of the energy you usually use?

Many studies have shown that conserving energy is the cheapest source of “new” energy, but conservation on its own won’t solve the big problems. Improving the sustainability of energy in Canada will not be effortless, painless or short-term, but once we account for all of the benefits, including improved ecosystem health, human health and economic competitiveness, we will come out ahead. It will take awareness and effort from all Canadians and a synergistic set of supporting policies to achieve our energy system sustainability goals.

Learn about Ostrom’s principles for collective action, and use the comments section below to weigh in with your thoughts on managing shared resources.